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Understanding the Families First Coronavirus Response Act: Does it Apply to Your Business?

Posted by Darryl V. Pratt | Apr 16, 2020 | 0 Comments

Understanding the Families First Coronavirus Response Act: Does it Apply to Your Business?


On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was passed. The Act has two important new laws for employees, intended to provide relief, as most people's lives have been impacted in some way by COVID-19: (1) the Emergency Family and Medical Leave Expansion Act; and (2) the Emergency Paid Sick Leave Act. FFCRA also offers tax credits and exemptions designed to protect the viability of businesses during a time of economic stress.

Emergency Family and Medical Leave Expansion Act

The Emergency Family and Medical Leave Expansion Act (EFMLEA) broadens the scope of the FMLA, making it applicable to employers with fewer than 500 employees, without the exclusions found in FMLA for companies with fewer than 50 employees within a 75-mile radius. Guidance has been provided specifying that the EFMLEA and the Emergency Paid Sick Leave Act (EPSLA) will not apply to certain employers with fewer than 50 employees if the leave requirements would jeopardize the viability of the business as a going concern and spelling out certain circumstances when the exemption can be claimed. The bottom line: unless your business qualifies for an exemption, it will likely be subject to EFMLEA (even if it was never subject to FMLA).

Eligible employees (those who have been employed for at least 30 calendar days) can apply for extended leave if, as a result of a public health emergency (i.e., COVID-19), they are unable to work (or telework) due to a need to care for a son or daughter under 18 years of age if the school or childcare provider has been closed or is unavailable, due to a public health emergency.

The first 10 days of any leave under EFMLEA are unpaid unless the employee chooses to use any accrued paid time off (PTO). After the first 10 days of EFMLEA leave, the employee is entitled to paid leave equal to the lesser of: (a) two-thirds of his or her regular rate of pay, or (b) $200/day; provided that the aggregate amount of EFMLEA leave may not exceed $10,000.

Emergency Paid Sick Leave Act

The Emergency Paid Sick Leave Act (EPSLA), which also applies employers with fewer than 500 employees unless they are exempt as discussed above, provides protections for employees who are unable to work (or telework) due to one of the following six circumstances:

  1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID–19.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
  3. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
  4. The employee is caring for an individual who is subject to an order as described in paragraph (1) or has been advised as described in paragraph (2).
  5. The employee is caring for a son or daughter of such an employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Eligible full-time employees are entitled to 80 hours of paid sick leave and eligible part-time employees are entitled to paid sick leave equal to the average number of hours worked over a two-week period. The rate of sick pay will be limited to a maximum of $511/ day (and $5110 in the aggregate) for employees who have been personally affected by COVID-19 (i.e., facing the circumstances (1), (2), or (3) above); and the rate of sick pay will be limited to a maximum of $200/day (and $2000 in the aggregate) for employees who are caring for children or another individual afflicted with COVID-19 (e.g., facing circumstances (4), (5), or (6) above). Note that sick days provided by the EPSLA do not carry-over to 2021. Employees entitled to sick days under the EPSLA can use these sick days before using accrued PTO.

Employment Implications

Whether or not a business is subject to the new laws, employees will likely have questions about their employment during the COVID-19 crisis. Business owners should inform their employees that they must notify human resources as soon as they are able if they foresee the need for leave under the ELMLEA or the EPSLA. After the first workday of expanded family and medical leave, the business may require employees to follow reasonable notice procedures in order to continue receiving expanded family and medical leave.

Eligible employees who take leave under the new legislation are entitled to be restored to the position they held when the leave commenced or an equivalent position with equivalent pay, benefits, and conditions of employment. However, this obligation does not protect an employee from employment actions such as layoffs for legitimate business reasons that the employer can demonstrate would have occurred regardless of the leave. In addition, an employer is not obligated to restore highly compensated key employees as defined under the FMLA to the same position, and employers with fewer than 25 employees are not required to restore an employee to the same position when the employee takes COVID-19-related leave and the position held by the employee no longer exists due to economic conditions or other changes in operating conditions caused by a public health emergency during the period of the leave. 

To fall within the exemption, the employer must make reasonable efforts to restore the employee to an equivalent position with equivalent pay, benefits, and other terms and conditions of employment, and if those reasonable efforts fail, the employer must make reasonable efforts to contact the employee about an equivalent position for one year following the end of the COVID-19-related emergency or the end of the twelve weeks of COVID-19-related leave taken by the employee. 

Covered employers qualify for full reimbursement for all qualifying wages paid under the FFCRA and are permitted to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid rather than deposit them with the IRS. If the retained payroll taxes are insufficient to cover the cost of the qualified sick and family leave, the employer may file a request with the IRS for an expedited payment of the remaining amount. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage and the amount of the employer's share of Medicare tax imposed on those wages.

Does your business need help navigating the coronavirus pandemic? Find more resources for your practice like educational webinars, client materials, and more by visiting the CDC's COVID-19 resource page.

You have invested a lot in making your business a success, and it is hard to think about relinquishing ownership or control of it. Nevertheless, planning is critical in creating a lasting legacy for your family. We can help you put a plan in place that helps you successfully pass your business on to the next generation and ensures that you have a financially secure retirement. Contact our office today at (972) 712-1515 to schedule a meeting.

About the Author

Darryl V. Pratt

With almost twenty-five (25) of experience as a dual-licensed Attorney and Certified Public Accountant, Darryl V. Pratt has practiced law in all areas of corporate and business law, non-profit law, estate planning, probate, guardianship, asset protection planning, bankruptcy (Chapters 7, 13 and 11), real estate, and taxation.


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